comparison of ulip

8/4/2019 Comparison of Ulip

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Table of contents

Preface

Executive summary

Acknowledgement

Introduction

Rationale

Literature Review

Objective

Methodology

Market Findings

Suggestions

Conclusion

Bibliography

Appendix

PREFACE

1



Insurance is an agreement between the persons insured and the insurer . The word

insurance has differed meaning than this legal meaning. It provides peace of mind with

respect to uncertainty of future.

In India the insurance sector is in nascent stage .only

6%(appx.) population of India is insured .General skepticism about insurance in the

Indian society is the primary region for such a low insurance penetration. The another fact

is that the risk landscape of different culture differs considerably. In leading people are

insuring their assets. Services such as psychotherapy for pets is already being offered . In

poor countries including India, basic medical care for people is hard to come by. As

concepts of values change so will the attitude towards insurance. Risk is directly related to

the values associated with possible loss. We can only lose what is of value to us. Nearly

everybody who is buying an insurance policy has the word ULIP on his or her the

products is contributing over 50%of market growth .While Unit linked insurance plans

provide risk cover, the driving force behind the purchase is investment not risk coverage.

Reliance life insurance provides ULIP which works all

through the life of consumer and meets changing requirements like addition protection

,liquidity through cash option to invest in different asset class, steady golden years and

many more.

EXECUTIVE SUMMARY

2



everybody who is buying an insurance policy has the word ULIP on his or her the

products is contributing over 50%of market growth .While Unit linked insurance plans

provide risk cover, the driving force behind the purchase is investment not risk coverage.




many more.

After doing the comparative analysis. Nearly everybody

who is buying an insurance policy has the word ULIP on his or her the products is

contributing over 50%of market growth .While Unit linked insurance plans provide risk

cover, the driving force behind the purchase is investment not risk coverage.




many more.

3



ACKNOWLEDGEMENT

The project titled" Comparison of ULIP of various companies which is the best selling

ULIP for various companies" has been completed successfully Reliance life insurance at

janakpuri branch, New Delhi.

I express my sincere thanks and gratitude to all persons who

extended their help and co-operation during my practical training and encouraged me in

preparing this project.

First of all I would like to thank Ms Namita Pathak under whose

able guidance the project was done .She guided me how to proceed with and helped me in

preparing questionnaire .

I extended my sincere thanks to MR. Pradeep Kumar Mishra,

sales manager, janakpuri who taught me about the plans and product features of the

company.

At last I extended my sincere thanks to all the persons of all

insurance companies with whom I met.

4



INTRODUCTION

WHAT IS LIFE INSURANCE?

Life Insurance is an agreement between the persons insured and the insurer. Under the

term of a Life Insurance contract, the insurer promises to pay a certain sum on the

happening of the event insured against (to a beneficiary), in exchange for premium

payment.

Usually, the insurance contract provides for the payment of an amount on the date of

maturity or at specified dated at periodic intervals; or in the event of unfortunate death, if

it occurs earlier. Life Insurance is universally acknowledged as a total to eliminate risk,

replace uncertainty with certainty and insure timely aid for the family in the unfortunate

event of the death of the bred winner. In other words, it is the civilized world partial

solution to the financial problems caused by death.

WHY IS LIFE INSURANCE REQUIRED (?)

Life Insurance cannot be and should not be compared with any other form of investment.

It provides a life long benefit, with returns when it is most required at the right time.

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• Replacement of income: One prime reason for buying Life Insurance is to replace

the income lost in the event of untimely death of the life insured. When the regular

income stops, the proceeds from a life insurance policy can be used to continue to

support the family members.

• Maintenance of life style: In case of the unexpected death of the Life Insured,

family members are often hard pressed trying to arrange for funds that can maintain

the standard of living that they have grow accustomed to Life Insurance offers

protection against such an unfortunate eventuality.

• Expense due to premature death: Life Insurance can play a crucial role to pay

off any debt left behind by the person insured. For example, car loans, medical bills,

mortgages, credit card payments, etc. are often left unpaid in case of sudden death.

These obligations can be met with life insurance without any depletion of family

assets.

• Planning for important events like children’s education, children’s marriage,

etc: With the cost of living going up by the day, prudent people would go for life

insurance as the most cost effective means to ensure that the important milestones in

their children’s lives are not hampered by the uncertainties of life.

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• Investment: Life Insurance can also be an investment instrument. Apart from the

tax benefits that are allowable by Government of India for investing in Life Insurance,

some Life Insurance policies offer returns on investments along with the cover for life.

This can help you with long-term financial goals.

RELIANCE LIFE ISURANCE

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading

private sector financial services companies, and ranks among the top 3 private sector

financial services and banking companies, in terms of net worth. Reliance Capital has

interests in asset management and mutual funds, stock broking, life and general insurance,

proprietary investments, private equity and other activities in financial services.

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered

with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act,

1934.

7



Reliance Capital sees immense potential in the rapidly growing financial services sector in

India and aims to become a dominant player in this industry and offer fully integrated

financial services.

Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need

based Life Insurance solutions to individuals and Corporates.

PRODUCTS OF RELIANCE LIFE INSURANCE

It offers two kinds of insurance plans.

1. TRADITIONAL PLAN

2. UNIT LINKED INVESTMENT PLAN

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TRADITIONAL PLANS: Some of the traditional plans offered by Reliance are as

follows:

1. RELIANCE ENDOWMENT PLAN

2. RELIANCE CASH FLOW PLAN

3. RELIANCE CHILD PLAN

4. RELIANCE TERM PLAN

5. RELIANCE WHOLE LIFE PLAN

6. RELIANCE SPECIAL TERM PLAN

7. RELIANCE CREDIT GUARDIAN PLAN

8. RELIANCE CONNECT 2 LIFE PLAN

9



UNIT LINKED INVESTMENT PLAN (ULIP)

ULIP is one where A unit linked plan is a part of the premiums you pay is utilized to

purchase units in different funds after deducting a small portion towards policy related

expenses. The expenses towards cost of insurance and fund management services are

deducted from your fund by canceling units a unit linked plan is bought fir its flexibility.

One can buy it for any financial needs because it gives liquidity and savings. It can be

bought for child’s educational expenses/marriage, retirement corpus or any other

contingency planning.

This plan gives you age based allocation. This means as your

age increases your money is moved to lower risk investment. The idea is to increase the

stability for investments as the risk appetite decreases.

The policy offers two plan options:

1. Ready-made plan option

2. Tailor-made plan option

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Ready-made plan option: It is a life stage based asset allocation. There are three

funds namely Fund A, Fund B, Fund C for the age bands 0 to 40, 41 to 60 and over 61

years. as at last birthday respectively .on commencement of the policy ,depending on

age last birth day of the life assured ,the premiums will be invested in one of the three

options .the change in the fund option ,if required as the life assured moves from one

age band into the next, will be automatically effected at the next policy anniversary .

Tailor-made plan option: Under this option one can decide the fund mix –

money

Market, corporate bond gilt and equity funds. The maximum allocation towards

money market cannot exceed 40% of the premium contribution at any point in time.

All the four fund are available irrespective of attained age.

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TYPES OF ULIP

1. RELIANCE -GOLDEN YEARS PLAN

2. RELIANCE –MARKET RETURN PLAN

3. RELIANCE –MONEY GUARANTEE PLAN

3. RELIANCE -AUTO INVESTMENT PLAN

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1. Reliance Golden Years Plan

Features

Invest systematically and secure your golden years

A flexible unit-linked pension product that is different from traditional life

insurance products with Vesting Age between 45 and 70 years

Choose from two different Investment Funds

Flexibility to switch between funds

Option to pay Regular, Single as well as Top-up Premiums

Choose to prepone I extend your Vesting Age

Tax free commutation up to one third of Fund Value at Vesting Age

How does Reliance Golden Years Plan work?

The plan works in two parts:

Accumulation period (i.e. the Policy Term): The plan builds up funds during this

period. This period ends-at the Vesting Date. Annuity 'period: After the Vesting Date, the

annuity payments begin. Vesting Date: You are free to choose your age of retirement

(Vesting between 45 and 70 years

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Benefits

At Vesting:

On vesting, you can purchase an Annuity Plan for the full Fund Value

You may commute up to one third of the Fund Value as tax free lump sum and the balance

can be used for the purchase of annuity.

Open Market Option: you can purchase an annuity either from Reliance Life Insurance

Company Limited or from any other registered Life Insurance Company

At Death:

In the unfortunate event of your death during the Policy Term, the Beneficiary will get the

Fund Value. This amount can be taken as a lump sum or an annuity can be purchased for

the entire lump sum or portion of it. The Beneficiary will have the option to purchase an

annuity either from Reliance Life Insurance Company Limited or from any other

registered Ute Insurance Company.

14



Annuity Options (currently available with Reliance Life Insurance Company

Limited):

Life Annuity

Ute Annuity with return of purchase price on death

Life Annuity guaranteed for 5, 10 or 15 years and payable for life thereafter

What are the different fund options?

Reliance Life Insurance Company Limited understands the value of your hard earned

money and to help you make your wealth grow we offer two different tailor-made

Investment Funds. You also have the option to allocate your premium in different funds in

the manner you wish.

The two different funds offered are:

1. Capital Secure Fund

Investment Objective: To maintain the value of all contributions (net of charges)

and all interest additions.

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Returns: Steady return for very little risk.

Risk Profile: Low

Investments: Your funds are invested 100% in Bank Deposits, Government Bonds

and Debt Investments of less than 180 days duration.

You may invest a maximum of 20% of the Total Premiums at any point of time

during the Policy Period in the Capital Secure Fund.

2. Balanced Fund

Investment Objective: To provide you with investment returns which exceed the

rate of inflation in the long term while maintaining a low probability of negative

investment returns.

Risk Profile: Low to medium.

Investments: In this fund, a major portion of your funds are invested in

Government Securities and Corporate Bonds while a small percentage is invested

in the Equity Market, which is exposed to market movements. Investment would

be at least 80% in Government Securities and Corporate Bonds and maximum

20% in Equities.

16



Value of Units: The Unit Price of each fund will be the Unit Value calculated on a

daily basis.

Total Market Value of assets plus/less expenses incurred in the

purchase/sale of assets plus Current Assets plus any accrued income net of

Fund Management Charges less Current Liabilities less Provision

Unit Value = ————————————————————————————

Total Number of units on issue (before any new units are allocated/

redeemed)

Flexibilities

Flexibility to pay top-ups

If you have received a bonus or some lump sum money you can use that as a top-up to

increase your investments at any time in your Policy. The minimum top-up amount is Rs

2,500. 95% of any amount paid as top-up is allocated to your funds.

Flexibility to pay Single Premium

If you do not want to pay premium regularly, you can choose to opt for Single Premium.

The minimum Single Premium amount is Rs 10,000.

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Depending upon the performance of your funds you can switch between them. There will

be one free switch in a Policy Year and for additional switches, Switching Charge of 1%

of amount switched will be levied, subject to a maximum of Rs 10.00 on each such

occasion.

Flexibility to prepone/extend your Vesting Age

You may choose to extend the Vesting Date to any later Policy

Anniversary, provided the Policy vests before the attainment of age 70 years. The request

for extending the Vesting Date must be made at least one month before the original

Vesting Date.

After the Vesting Date, the benefit payable at any time will be the Fund Value.

The Policyholder may also choose an earlier Vesting Date, after completion of five years

of Policy Term or age 45 years, whichever is later. The request for an earlier Vesting Date

should be received at least one month before the proposed Vesting Date.

On attainment of the new Vesting Date the Policyholder is eligible to purchase Annuity

for the full Fund Value or commute up to one third of the Fund Value as tax free lump

sum and the balance can be used for the purchase of annuity. The annuity can also be

purchased from us or from any other registered Life Insurance Company.

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What is the Policy Term?

Minimum Policy Term: 5 years

Minimum age at entry: 18 years

Maximum age at entry: 65 years

Minimum age at vesting: 45 years

Maximum age at vesting: 70 years

1. Premium Allocation Charge:

Year 1 10%

Subsequent years 5%

Single premium 5%

Top-Up premiums 5%

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2. Fund Management Charges

Funds Annual Rate*

Capital Secure 1.50%

Balanced 1.50%

* The Fund Management Charge is levied on daily basis at the time of

computation of Unit Price.

3. Switching Charge: One free switch is allowed in each Policy Year. Subsequent

switches will attract a charge of 1% of the amount switched subject to a maximum

of Rs 1000 per switch. This charge will be recovered by cancellation of units.

4. Surrender Charges: The Surrender Charges as percentage of Fund Value are

given below:

Year of Policy surrender Surrender Charges as

percentage of Fund Value

4 10%

5 5%

6 or more Nil

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How safe is your investment?

The investments made in the funds are subject to market risks that are prevalent at any

point in time.

The Unit Price' is a reflection of the financial and Equity/Debt Market conditions and can

increase or decrease at any time due to this.

Benefit payable under the Policy will be made according to the tax laws and other

regulations in force at that time.

There are no guarantees for any fund of any kind under this Policy. The benefit payable on

maturity will be equal to the value of your units.

The name of the funds in no way indicates the returns derived from them.

Please note that Reliance Life Insurance Company Limited is only the name of the

Insurance Company and Reliance Golden Years Plan is only the name of the Policy and

does not in anyway indicate the quality of the Policy or its future prospects or returns.

21



2. Reliance market return plan

Key Features

Twin benefit of market linked return and insurance protection

A Unit Linked Plan, different from traditional Life Insurance products with

maximum maturity age of 80 years

Option to create your own portfolio depending on your risk appetite

Choose four different investment funds


Option to pay regular as well as single premium & top-ups

Option to package your Policy with Accidental rider

Flexibility to increase the Sum Assured

22



Liquidity through partial withdrawals

How does this Plan work?

The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of

your choice and units are allocated depending on the price of units for the fund/funds.

The Fund Value is the total value of units that you hold in the fund/funds. The Mortality

Charges and Policy Administration Charges are deducted through cancellation of units

whereas the Fund Management Charge is priced in the Unit Value.

Benefits

Life Cover Benefit: In case of unfortunate loss of life, the Beneficiary will get Sum

Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured

within the minimum and maximum levels mentioned below:

Minimum Sum Assured:

Regular Premium: Annualised Premium for 5 years or Annualised Premium for

half the Policy term, whichever is higher

23



Single Premium: 125% of the single premium

Maximum Sum Assured:

No Limit (Rs. 500,000 for age up to 12 years)

Maturity Benefit: On survival to maturity the Fund Value on Maturity will be paid out.

Rider Benefit: You can add the Accidental Death & Accidental Total and Permanent

Disablement Benefit Rider (available only with the regular premium option).

This benefit doubles the life coverage in case of accidental death or accidental total and

permanent disablement at a very nominal additional cost. The maximum cover is Rs

50,00,000 per life.

In case of accidental death of the Life Assured during the Policy Term, the Accident

Benefit Sum Assured will be paid immediately in a lump sum.

In case of accidental total and permanent disablement, 1/10th of the Accident Benefit Sum

Assured will be paid at the end of each year for ten years. If the total and permanent

disablement has commenced, the Accidental Death Benefit Cover ceases.

In case of maturity or on death of the Life Assured before payment of all installments of

Accidental Total and Permanent Disablement Benefit, the remaining unpaid instalments if

24



any will be p-aid in one lump sum along with Death or Maturity Benefit.

Accidental total and permanent disablement means disability caused by bodily injury,

which causes permanent inability to perform any occupation or to engage in any activities

for remuneration or profits. This disability should last for atleast 6 months before being

eligible for Accidental Total and Permanent Disablement Benefits.

Accidental total and permanent disablement includes loss of both arms or both legs or one

arm and one leg or of both eyes. Loss of arms or legs means dismemberment by

amputation of the entire hand or foot. Loss of eyes means entire and irrecoverable loss of

sight.


We understand the value of your hard earned money and in our endeavour to help you

grow your wealth, we offer you 4 different tailor-made investment funds. You have the

option to allocate your premium in these funds as you wish.

They are:

1. Capital Secure Fund: The investment objective of this fund is to maintain the

25



value of all contributions (net of charges) and all interest additions. This fund

offers steady return for little risk. The risk profile of this fund is low. Investments

would be 100% in Bank Deposits, Government Bonds and debt instruments that

offer financial security.

Further, allocation in Capital Secure Fund for a Policy is subject to a maximum

limit of 20% at any time.

2. Balanced Fund: The investment objective of this fund is to provide you with

investment returns, which exceed the rate of inflation in the long term while

maintaining a low probability of negative investment returns. Here, a major portion

of your funds are invested in Fixed Securities while a small percentage is invested

in the Equity Market, which is exposed to market movements. The risk profile of

this fund is low to medium.

Investments would be at least 80% in Fixed Interest Securities and maximum 20%

in Equities.

4. Growth Fund: The investment objective of this fund is to provide you with

investment returns, which exceed the rate of inflation in the long term while

maintaining a moderate probability of negative investment returns. A Greater

portion of your funds are invested in Fixed Securities while a small percentage is

5. invested in the Equity Market, which is exposed to market movements. The risk

profile of this fund is medium to high.

26



Investment would be at least 60% in Fixed Interest Securities and maximum 40%

in Equities.

4. Equity Fund: The investment objective of this fund is to provide Policyholders

with high exposure to equities and the possibility of investment returns, which

generate a high real rate of return in the long term while recognizing that there is a

significant probability of negative investment returns in the short term. This fund

offers a totally equity based investment option. Your returns depend entirely upon

the performance of the Equity Market. The risk profile of this fund is high. The

higher risk of this portfolio means that expected returns would also be higher.

Investment would not exceed 30% in Bank Deposits and maybe up to 100% in

equities.

Value of Units: The Unit Price of each fund will be the Unit Value calculated on a daily

basis.

Total Market Value of assets plus/less expenses incurred in the

purchase/sale of assets plus Current Assets plus any accrued income net of

Fund Management Charges less Current Liabilities less Provision

Unit Value=

——————————————————————————————

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—

Total Number of units on issue (before any new units are allocated/

redeemed)

Flexibility

Pay top ups

If you have received a bonus or some lump sum money you can use that as a top-up to

increase the investments component 'in your Policy. Top-Ups are allowed only if all

premiums due till date are paid. There is no restriction on the maximum amount of top-up.

However top-ups made over and above 25% of the basic regular premium paid till date (or

above 25% of the Single Premium) will lead to an increase in Sum Assured to the extent

of 125% of the excess top-up premiums. The minimum top up amount is Rs. 2,500.

98% of any amount paid as top-up is allocated to your funds.

Make partial withdrawals

After three years,

If your Fund Value is more than the Sum Assured, then the maximum partial

withdrawal can be Rs 5,000 per withdrawal

If your Fund Value is more than the Sum Assured, then the maximum partial

28



withdrawal is the difference between the Fund Value and the Sum Assured plus

Rs 5000

•

Higher amounts of partial withdrawals are allowed, subject to underwriting

Two partial withdrawals are allowed every year. Minimum Fund

Value after each partial withdrawal should be Rs 10,000

For the purpose of partial withdrawals, top-ups would have a lock-

in of three years from the date the top- ups are made, and until then no partial

withdrawals of units from top-up premiums are allowed. This condition is not

applicable if the top-up premiums are paid during the last three years of the Policy

term.

If the Life Assured is minor, - partial withdrawals are allowed on or

after attainment of age 18 years or after 3 years if later

Increase the Sum Assured: You are free to increase the Sum Assured. Once Sum

Assured is increased, it remains for the entire outstanding policy term. Increase in Sum

Assured is subject to underwriting.

Switches between different Unit Linked Funds: You may switch some or all of the

Fund Value between different unit-linked funds offered under the Market Return Plan.

One free switch is available in a Policy Year.

29



Redirect future premiums: Redirection is retaining the allocation of units you have

already invested and purchasing units using subsequent premium payments in an

alternative allocation of your choice. The units you have already purchased with your

premiums remain as they are while you redirect your future premium payments to other

funds of your choice. (applicable with regular premium option only)

Who can buy this product?

Minimum age at entry: 30 days

Maximum age at entry:65 years

Maximum age at maturity: 80 years

What is the Policy term?

Minimum Policy term: 5 years

Maximum Policy term: 40 years

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Charges under the Plan:

For regular premium policies:

Term of the Policy

Years 5-9 10-14 15+

First Year 10% 15% 20%

Thereafter 5% 5% 5%

The Premium Allocation Charge for Single Premium & top-ups is 2%.

2. Policy Administration Charge: Rs.40 will be deducted from your Unit Account

each month.

3. Fund Management Charges:

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Unit Linked Funds Annual Rate

Capital Secure 1.50%

Balanced 1.50%

Growth 1.75%

Equity 1.75%

(The Fund Management Charges will be deducted on a daily basis)

Revision of Charges: the Fund Management Charges are subject to revision at any time,

but they will not exceed 2% p.a. for the Capital Secure Fund and 2.5% p.a. for the other

funds.

Any changes made to the charges under this Policy will be subject to IRDA approval.

4. Partial Withdrawal Charges: Rs.100 per withdrawal will be deducted from your

Unit Account.

5. Switching Charges: 1% of the amount switched, with a maximum of Rs.1,000/-

per switch.

6. Mortality Charges: The Mortality Charges, based on your attained age, are

determined using 1/12th of the charges mentioned in Appendix 1 and are deducted

from the Fund Value monthly.

7. Surrender Charge: This charge is levied on the unit fund at the time of surrender

of the policy as under:

32



Regular Premium

Number of Years premiums paid Surrender Charge as percentage of Fund

Value

Less than 1 100%

2 50%

3 and more NIL

Single Premium - NIL

How safe is your investment?

1. The investments made in the Unit Funds are subject to investment risks associated

with Capital Markets and the NAVs of the units may go up or down based on the

performance of the fund and the factors influencing the Capital Market, and the

insured is responsible for his/her decisions.

2. The Unit Price is a reflection of the financial and equity/debt market conditions

and can increase or decrease at any time due to this.

3. Benefit payable under the Policy will be made according to the tax laws and other

regulations in force at that time.

4. There are no guarantees for any fund of any kind under this Policy. The benefit

payable on maturity will be equal to the value of your units.

5. The name in the funds in no way indicates the returns derived from them.

33



6. Please note that Reliance Life Insurance Company Limited is only the name of the

Insurance Company and Reliance Market Return Plan is only the name of the Unit

Linked life Insurance Policy and does not in anyway indicate the quality of the

Policy or its future prospects or returns.

What happens if I discontinue paying regular premiums?Within 3 years of the

inception:

If due premiums have not been paid for the first three consecutive years, the insurance

cover will cease immediately. However, you will continue to participate in the

performance of Unit Funds chosen by you. The Monthly Administration Charges will be

deducted from Fund Value by cancellation of units.

You may revive the Policy by re-commencing the premium payment within a period of

three years from the date of first unpaid premium but before the II1aturity date of the

Policy.

In case the Policy is not revived during Revival Period, the Policy shall be terminated and

the Surrender Value, if any, shall be paid at the end of the third Policy Anniversary or at

the end of the period allowed for revival.

After paying of at least 3 full years' premiums:

If premiums have been paid for at least three consecutive years and subsequent premiums

34



are unpaid, the Policy will remain in force with Sum Assured intact. The Mortality and

Policy Administration charges will be deducted from your account by cancellation of

units. You will continue to participate in the performance of the Unit Funds chosen by

you.

You may revive the Policy by re-commencing the premium payment within a period of

three years from the date of first unpaid premium but before the maturity date of the

Policy.

At the end of the allowed Revival Period, if the Policy is not revived, it shall be terminated

by paying the Surrender Value.

However, you may opt to continue the Policy even beyond the Revival Period (but not

beyond the maturity date of the Policy). The Mortality and Administration Charges will be

deducted from your account by canceling the units. You will continue to participate in the

performance of the Unit Funds chosen by you.

This option will be available until the Fund Value does not fall below an amount

equivalent to one full year's premium.

If at any point of time, the Fund Value reaches an amount equivalent to one full year's

premium, the Policy shall be terminated by paying the Fund Value.

35



Tax Benefit

Premiums paid are eligible for tax deduction under Section 80C of the Income Tax Act,

1961. Provided the premium in any years during the term of the Policy does not exceed

20% of the Sum Assured, maturity and withdrawals are eligible for tax benefit under

Section 10(10D). Death Benefit are tax free under Section 10(10) D of the Income Tax -

Act, 1961. Under Section 80C premiums up to Rs 100,000 are allowed as deduction from

your taxable income.

3. Reliance Money Guarantee Plan

Key Features Reliance Money Guarantee Plan:

Capital Guarantee The sum of all premiums paid is guaranteed on maturity or on death

before the maturity.

36



Capital Guarantee is available on both the basic premiums as well as on top-up premiums

Unique Return Shield feature to protect your returns.

Choice to invest from 3 pre-packaged investment fund options

Unmatched flexibility through our ‘Exchange Option’ to move between the Reliance

Money Guarantee suite of products offered, as you grow up the ladder

Liquidity in the form of partial withdrawals from top-up fund

Option to package with Accidental Death & Disability and TermInsurance riders

How does this plan work?

The premium contributed by you net of Premium Allocation Charges andMiscellaneous Charge is invested in fund option of your choice for a specified period of

time as selected by you and units are allocated depending on the price of units for the

fund/funds. The Fund Value is the total value of units that you hold in the fund. The

Policy has a minimum Guaranteed Benefit which is equal to total of all premiums paid(excluding any additional and extra premiums if any),to be payable on survival to maturity

or death. The amount of top-up premiums paid is also guaranteed on death provided there

is no partial withdrawal.The amount of top-ups premiums is guaranteed on maturity provided the top-ups premium was paid at least 10 years before the date of maturity and

there is no partial withdrawal. The Sum Assured under the policy is fixed on the basis of

the selected annual premium and Policy Term.

The Mortality Charges and Policy Administration Charges are deducted through

cancellation of units whereas the Fund Management Charges is priced in the Unit Value.

The premiums for riders, if selected, are payable over and above the premium for the basic

Policy.

Benefits in Details.

Capital Guarantee: The plan offers Capital Guarantee provided the Policy is kept in full

force by payment of due premiums on time

37



Capital Guarantee under the Basic Plan: Premiums paid under the Basic Plan are

guarantee don the maturity of the Policy or on death during the Policy Term.

Capital Guarantee under the Top-Up premiums. Each top-=up premium paid is

guaranteed on death during the Policy Term provided there are no partial withdrawalsfrom that top-up.

Each top-up premium paid is guaranteed on maturity of the Policy provided the PolicyTerm is greater than ten years, there are no partial withdrawals from that top-up and the

top-up was paid tem years before the maturity date.

Life Cover Benefit: The amount of Death Benefit depends on the age of the Life Assuredat the time of death

I. If the age of the Life Assured at the time of death is more than 12years last

birthday while the Policy is force, the Company will pay the sum of:

1. Higher of(Sum Assured, Fund Value as on date of intimation of deathunder Basic Plan, Premiums paid under the Basic Plan excluding any extra or

additional premiums paid.)

And

2. Higher of()Fund Value as on date of intimation for death under top-ups and

top-up premiums paid provided no partial withdrawals is made from that top-up)

II. However if the Life Assured’s age at the time of death is less than or equal to 12

years last birthday while the Policy is in force, the Death Benefit will be the sum of :

1. Higher of (Fund Value as on date of intimation of death under

Basic Plan and premiums paid under the Basic Plan excluding any extra or

additional premiums paid.

2. Higher of( Fund Value as on date of intimation of death under

top-up and top-ups premium paid provided no partial withdrawals is made from

that top-up)

III. The Policy terminates on payment of the Death Benefit.

38



Maturity Benefit: The Maturity Benefit is the Sum of

1. Higher of (und Value under Basic Plan and Premiums paidunder Basic Plan

2. excluding any extra or additional premiums paid)

And

3. Maturity Benefit under Top-Up

If Policy Term is greater than ten years, the Maturity Benefit under top-up is the

higher of (Fund Value under the top-up and top-up premium paid provided there is no

partial withdrawal from that top-up)If Policy Term is tem years, the Maturity Benefit under the top-up is the Fund Value

under the top-up.

The policy Terminates on payment of the Maturity Benefit.

Sum Assured:

The fixed Sum Assured under the Basic Plan will be calculated as the amount of annual

premiums payable for half the Policy Term.

Rider Benefit: You can add Accidental Death & Accidental Total and Permanent

Disablement Benefit Rider & Term Life Insurance Benefit Rider.


39



A. Funds available in respect of Basic Plan and top-up

premium

The plan offers three funds for Basic Plan and top-ups-Fund D, Fund E and Fund

F. You have the option to decide your own fund mix with respect to premiumsunder the Basic Plan and top-ups.

B. Funds available in respect of Return Shield Option

Return Shield Fund will be available if Return Shield Option is selected. Thereturns earned under the Basic Plan and top-ups will be transferred to Return

Shield Fund if Return Shield option is selected.

C Funds available during settlement period

If you have opted for the settlement option, then Fund would apply by default

during the settlement period.

Cut-off Timings

a) Uniform cut-off timings for fro applicability of Net Asset Value: The allotment

of units to the Policyholder should be done only after the receipt of premium

proceeds as stated below:

b)Allocation (Premium allocations, switch in): In case of new business, units shall be

allocated on the day proposal is completed and result into a Policy by adjustments of

application money towards premium.

In the case of renewal premiums, the premium will be adjusted on the due date, whether

or not it has been received in advance. (This assumes that the full stipulated premium is

received on the due date.) Renewal premiums received in advance will be kept in the

40



deposit account and will not earn any returns until the renewal premium due date on

which the same will be applied to the Unit Funds.

i) In respect of renewal premiums/funds switched received up

to 4.15 p.m by the Insure along with a local cheque or a demand draft payable at par at the place where the premium is received, the closing NAV of the day on

which premium is received shall be applicable.

ii) In respect of renewal premiums/funds switched

received after 4.15 p.m by the Insure along with a local cheque or a demand draft

payable at par at the place where the premium is received, the closing NAV of the

next business day shall be applicable.

iii) In respect of renewal premiums received withoutstation cheques/demand drafts at the place where the premium is receive, the

closing NAV of the day on which cheques/demand is realized shall be applicable.

iv) For advance renewal premium the closing NAV of thedue date is applicable.

Any amount less than the due stipulated regular/limited premium payable stated in theContract will not be accepted.

a) Redemptions:

i) In respect of valid application received (e.g surrender, maturity claim,

Switch out etc) up to 4.15 by the Insurer, the same day’s closing Nave shall be

applicable.

ii) In respect of valid application received (e.g. surrender, maturity claim, switch

out etc) after 4.15 p.m by the insurer, the closing NAV of next business day

shall be applicable.

41



Fund Valuation:

The value of the fund will be equal to the no of units multiplied by the Net Asset

Value(NAV) of each unit in the fund.

The computation of NAV will be based on whether the Company is purchasing

(Appropriation Price )or selling (Expropriation Price) the Assets in order to meet theday to day transaction of Unit Allocations and Unit Redemptions i.e the Company shall

be required to sell/purchase the Assets if Unit Redemptions/Allocation exceed Unit

Allocation / Redemptions at the Valuation Date.

The Appropriation Price shall apply in a situation when the Company is required to

purchase the Assets to allocate the units at the Valuation Date. This shall be the amount

of money that the company shall put into the fund in respect of each unit it allocates inorder to preserve the interests of the existing Policyholders.

The Expropriation Price shall apply in a situation when the Company is required to sell

Assets to redeem the units at the Valuation Date. This shall be the amount of moneythat the company should take out of the fund in respect of each unit it cancels in order

to preserve the interests of the continuing Policyholders.

Computation of Net Asset Value(NAV)

When Appropriation Price is applied: The NAV for a particular fund shall be computed

as: Market Value of investment held by the fund plus the expenses incurred in the

purchase of the Assets plus the value of any Current Asset plus any Accrued Income

net of Fund Management Charges less the value of any Current Liabilities les

Provision, if any. This gives the net Asset value of the fund. Dividing by the number of units existing at the Valuation Date (before and new units are allocated),

Gives the Unit Price of the fund under considerations.

42



When Expropriation Price is applied: The NAV for a particular fund shall be computed

as: Market Value of investment held by the fund less the expenses incurred in the sale

of the Assets plus the value of any Current Assets Value of the fund. Dividing by thenumber of units existing at the Valuation Date (before any units are redeemed), gives

the Unit Price of the fund under consideration.

In case the valuation day falls on a holiday, then the exercise will be done the

following working day.

The Company reserves the right to suspend unit pricing if it is not possible to value

some or all of the Assets of a Unit Linked Fund because of closure of stock exchangesor investment markets for the duration of these conditions.

Flexibility available under Reliance Money Guarantee Plan

Return Shield an innovative way to protect your returns

This option is available to you during the term of the Policy. to you during the term of

the Policy. You can select or delete this option at any time during the term of thePolicy.

There will not be any charge for the Return Shield option under followingcircumstances;

If the option is selected under Basic Plan on commencement of the plan

If the option is selected under top-up premium at the time of payment of top-up premium

Under all other circumstances, a fixed charge of Rs100 is payable every time the Return

Shield option is selected.

If this option is selected, the return earned on Basic Plan and Top-Ups during the monthwill be transferred to Return Shield Fund at the end of the Policy month. The operation of

Return Shield option under Basic Plan is given below:

43



The amount of returns to be transferred to Return Shield Fund will determined separately

fro each Policyholder in respect of each of the tree funds D,E and F Fund The method

used for determining the return to be transferred is given below:

=Fund Value) on the last working day of the Policy month

Less Fund Value on last working day of the previous Policy monthLess amount of inflows during the month.

The operation of Return Shield option under top-up premium(s) will be similar to thatBasic Policy.

The amount will be transferred to Returns Shield Fund at the prevailing Unit Price.

b) Exchange Option: This option is available for existing Policyholders after completion of three Policy years from the date of commencement, Under this

option, the Policy holder can transfer Policy Benefits (surrender, maturity etc.)

either fully or partially to another plan. This option must be exercised at least

30 days before the date of receipt of benefit under the Policy. The Terms andConditions as specified in the opted Policy Document would apply to the

Policy holder opting for the ‘Exchange Option’.

If a Policyholder is opting for the Reliance Money Guarantee plan under

exchange option, the Allocation Charge in year of exchange will be 15% of the

annualised premium of Reliance Money Guarantee Plan. If the ExchangeOption is used to pay top-ups in the Money Guarantee Policy, the Allocation

Charge in the year exchange will be 1% of the top up amount.

Pay to-up: If you have received a bonus or some lump sum money you can use

that as a tom-up to increase the investments component in your Policy. Top-

ups are allowed only if all basic premiums due till date are paid. At any time,

the maximum amount of all top-up premiums allowed is restricted to 25% of the total basic regular premium paid till date.

The minimum top-up premium amount is Rs 2,500. The amount of top-up

premiums paid is also guaranteed on death provided there is no partial

withdrawal. The amount of top-up premium is guaranteed on maturity provided

44



the top-up premium was paid 10 years before the date of maturity and there is

no partial withdrawal made from the top-up fund.

Partial Withdrawals: These are allowed for units created by top- up premiums. There is lock-in period of three years under the top-ups from the

date of payment of top-ups during which no partial withdrawal is allowed. The

lock-in period is not applicable to Top-ups made during last three years of a

Policy. After partial withdrawal, the original Tranche of that particular top-upwill lose the Capital Guarantee. Where Life Assured is minor, partial

withdrawals will be allowed only after completion of age 18years.

No partial withdrawals are allowed for basic regular premium funds.

Switching Option: You can switch the whole or part of the funds between

funds D,E,F at any time during the Policy Term. You can also switch from

Return Shield option to any one fund D,E and F. first four switches in any

Policy year are free.

If Return Shield option is selected switching from any of the funds D,E and F

in to Return Shield option will be done at the end of every Policy month. Suchswitches will not be counted as part of the four free switch during the Policy

year.

Premium Redirection: You may instruct us in writing to redirect all the future

premiums under a Policy in an alternative proportion to the various Unit Fundsavailable. Redirection will affect the allocation of premium(s) paid prior to the

request.

Settlement Options: This option enables you to take the maturity proceeds inthe for of periodical payments after the Maturity Date instead of a lump sum on

the Maturity Date. You can choose to redeem the units in your Unit Fund

anytime up to 5 years from the date of maturity. Capital Guarantee is not

available during this period.

During this period, there will be no Life Cover. The only fund option available

during the settlement period is Fund C.. The maturity proceeds will

45



automatically be transferred in to Fund C if settlement options is selected. The

Policy will participate in the performance of units of Fund C.

The Company will deduct Policy Administration Charges by cancellation of

units. The Fund Management Charge will be priced in the Unit Value.

In the event of death during settlement period the Fund Value as on the date of

intimation at the office will be paid to the nominee.

In order to opt for this option the customer has to give notice of 30 days to the

Company before the Maturity Date.

During the settlement period, the investments made in the Unit funds are

subject to investment risks associated with Capital Markets and the Units

Prices may go up or down based on the performance of the fund and the factorsinfluencing the Capital Market, and the Policyholder is responsible for his/her

decisions. The investment risk during the settlement period will be bone by thePolicyholder

Convenient Premium Paying options

You can pay the regular premiums in yearly, half yearly, quarterly and monthly

mode and pay by cash, cheque, debit/credit card, ECS & direct debit.

The minimum regular premium is Rs 10,000 for annual mode, Rs 5,000 for

half-yearly, Rs 2,500 for quarterly and Rs 1,000 for monthly s mode. The

minimum top-up premium is Rs 2,500.

4. Realiance Automatic Investment Plan

46



Key Features

Two plan options to choose form Ready-made and Tailor-made Life Stage

asset allocation to ensure automatic change in investment patterns, under the

Ready-made Plan option.

Freedom to decide your own fund mix based on your risk profile under the

Tailor-made Plan.

Allows Systematic Transfer Plan to average out the cost of unit purchases in

equity.

Regular, limited, single premium paying options.

Unmatched flexibility through our ‘Exchange Option’

Liquidity in the form of partial withdrawal

Option to avail of Accidental Death Benefit & Accidental Total and Permanent

Disability and Term Insurance riders.

Benefit

47



Life Cover Benefit: On death before 12th birthday the Death Benefit will be

the Fund Value relating to Basic Policy as on the date of receipt of intimation

of death.

On death after 12th

birthday but before 60th

birthday: Death Benefit will behigher of Sum Assured less all Partial Withdrawals made from the Basic Policy

fund in the last 24 months prior to date of death and Fund Value relating to

Basic Policy as on the date of receipt of intimation of death.

The fund Value relating to the top ups will also be paid in each of the above

cases. The Policy terminates on payment of Death Benefit.

NAME OF THE UNIT LINKED INVESTMENT PLANS

OFFERD BY VARIUOS COMPANIES

48



There are various companies in the insurance market which offers ULIP . I have

taken only five among all those companies and the names of their ULIP alongwith

the companies names are as follows:

• ICICI PRUDENTIAL— LIFE TIME SUPER

• BAJAJ ALLIAZ-- NEW UNIT GAIN

• SBI LIFE INSURANCE-- HORIZON II

• BIRLA SUN LIFE— FLEXI SAVE PLUS

• HDFC SL--- UL ENDOWMENT YOUNG STAR

RATIONALE

49



Insurance sector has a very low penetration in India .This is primarily due to insurance

averseness in the society .Adding to this is the risk taking ability of the young

demographic structure of the country. They do not feel much insecure about future. They

are ready to take any risk which comes in their way.

Therefore, an investment which gives a good return, which

is risk inherent attracts today's customers. Another major class of potential consumers

perceive that any premium paid is only a hole in the pocket. They depend on other to help

them in crisis .

To cover such consumer classes Unit Linked Investment

Plans acts as an attractive tool. They provide both insurance cover as well as return on

investment made in the form of premium paid.

Hence, a comparative analysis of Unit Linked Investment

Plans (ULIPs) offered by various company will help to improve the ULIP offered by

Reliance life insurance to stay ahead or at par with the competition.

LITERATURE REVIEW

50



Indians rarely insure their houses or their goods and belongings which may be in

transit while they are moving houses. Often, events such as trade fairs, exhibitions and

sporting events are either not insured or under insured.

Are we an insurance –averse nation? In terms of penetration, insurance permia as a

percentage of GDP in India are 3.14 per cent(2.53 per cent in life and 0.61 per cent in

non-life). This is higher than Brazil at 3.01 per cent (comparable in terms of state of

development) and China at 2.7 per cent( comparable in terms of population and

development). Therefore, while India cannot be termed being insurance-averse, is it

tougher market for insurers? What does this mean for a individuals and insurance

providers? What does the future hold?

Culturally, we find the thought of unforeseen death or accident unacceptable enough to

show the door to an insurance agent who points out these grim scenarios. The

presumption is that insurance is a sire shot loss making proposition. Forget household

insurance or travel insurance –do people have life and health insurance? There is a

tendency to think that any premium paid out is an outgo and it is highly unlikely that

anything would go wrong. It is important to analyze if India as a nation is a tougher

Nut to crack, keeping in mind that the sector was opened to private players only in

2000.

Nearly everybody who is buying an insurance policy has the word ULIP on his mind

(the product is contributing over 50 per cent of market growth). While unit linked

51



insurance plans provide risk cover, the driving force behind the purchase is investment

and tax benefit and not risk coverage. The Invest India Market Solutions and Asian

Development Bank 2004 survey shows that while 19 per cent of earners in India have

bought endowment plans, only 2.7 per cent have bought term insurance.

While this may appear contradictory, the fact is that with better technology, the

probability of accidents has come down, be it in aviation, railways, dams or high rise

buildings. But when an accident occurs, its chances of assuming the nature of a

disaster have also increased. This is corroborated by the Swiss Re study, which says

that while the world is witnessing more disasters, there are fewer accidents.

Another factor to consider is India’s demography. The population projections for India

for 2001-2026, released in May this year, say that an average Indian will be expected

to be 31years old in 2026 compared to 23 years old in 2001. young people by nature

take higher risks, and while there are no conclusive studies, that might also contribute

to ‘insurance aversion’.

Over the next decade India would need to factor in the impact of losses if assets and

events are not adequately insured. India also needs to increase insurance cover and

improve risk management attract more foreign investment in big projects

52



While insurance is a cost, it is a cost effective way to mitigate losses from events

occurring unexpectedly. More people will embrace life insurance once they are in the

credit cycle, when the cost of death and disability becomes more apparent and when

people star thinking in terms of long-term life and financial goals. Industrialized

countries form 88 percent of the insurance market while emerging markets account for

12 per cent. That is an opportunity for an insurer

OBJECTIVE

To compare the features of the ULIP’s of various companies .

53



METHEDOLOGY

A descriptive research was carried out to do the comparative analysis of Unit LinkedInvestment Plan (ULIP) of various companies.

METHOD OF DATA COLLECTION

PRIMARY DATA

Primary data was collected through questionnaire.

SECONDARY DATA

Information about the ULIP of Reliance Life Insurance was collected from the website of Reliance Life Insurance.

TOOLS

A simple comparison of ULIP offered by various company was done.

54



MARKET FINDINGS

On the basis of the survey conducted in the various companies the findings have been

tabulated as below:

Product

Feature

Reliance

Automatic

InvestmentPlan

ICICI

Prudenti

al LifeTime

Super

Bajaj

Allianz

NewUnit

Gain

HDFC

SL UL

Endowment Young

Star

Birla

Sun

LifeFlexi

SavePlus

SBI Life

Horizon

II

The Reliance

Automatic

Investment Plan

Life

stage based

plan

Yes No No NO No Yes A plan that does

all while you relax

Free

Switches

52 4 3 24 2 0 Highest number of

free switches

Switching

charges

100 100 - 100 100 Not

available

Nominal

switching charges,

at par with

competition

Ready-made/

Tailor-made plan option

Yes No No No No No Only plan to offer

investment fundoptions catering to

risk averse and

risk lovers

Systematic

Transfer Plan

Yes No No No No No Only to offer STP

option. Take

advantage of rupee-cost

averaging

55



Product

Feature

Reliance

Automatic

Investment

Plan

ICICI

Prudenti

al Life

Time

Super

Bajaj

Allianz

New

Unit

Gain

HDFC

SL UL

Endowme

nt Young

Star

Birla

SunLife

Flexi

Save

Plus

SBI Life

Horizon

II

The Reliance

Automatic

Investment Plan

Exchange

Option

Yes No No No No No Only plan to

offer Exchange

with another UL

Plan- RAIP

Funds

Offered

7 4 6 6 3 3 Maximum

number of funds

to choose from

Top-ups Yes No Yes Yes Yes Yes Recognizes the

strong consumer

demand for top-ups

Partial

Withdrawals

Yes Yes Yes Yes Yes Yes Enables

Liquidity.

Withdrawalsfrom top-ups are

free

Surrender

Charge

Till 5th

year

Till 4th

year

Till 3rd

year

Till 3rd

year

Till 4th

year

Entire

policy

term

Low exist charge

56



Feature Reliance

Automatic

Investment

Plan

ICICI

Prudential

Life Time

Super

Bajaj Allianz

New Unit

Gain

HDFC SL

UL

Endowment

Young Star

Birla

SunLife

Flexi Save

Plus

SBI Life

Horizon II

RevivalPeriod

3 2 2 2 2 5

Min

Premium

(Rs)

10000 18000 10000 10000 10000 5000

FMC 1.25% to

1.4%

0.75 to

2.25%

0.95 to

1.75%

0.8% 1% 0.25 to 1.5

%

Top-up

Charges

2% Not allowed 2% 2% 2% 2%

Min/Max

entry age

30days/ 65

years

0/65 years 0/60 years 18/65 years 30/60 years 0/60 years

57



SUGGESTIONS

The company more focused towards promoting traditional plans .this has led to inadequate

promotional activities for ULIP.The two reasons have led to less awareness among the

consumers of ULIP.the Company should focus more on creating awareness about the

benefits of ULIP among the people of small towns and cities. So that they start investing

their money in unit linked investment plan more than the traditional plans.

58



CONCLUSION

After going through the responses of the various insurance companies:

In context of fund management charges Reliance

Automatic investment plan is cheaper than ICICI Prudential's life time super Bajaj

Allianz's New unit gain although it is comparable with SBI life's horizon.

Reliance Automatic investment plan provides

automatic asset allocation means it allocates asset according to your risk at a particular

age. It is a systematic transfer plan which helps average out the cost of units. it gives

exchange option ,option to move between in and out of specific Reliance life ULIP. It

provides top ups means it can be used to increase the investment component in the policy.

Partial withdrawals provides liquidity in case of need, settlement option provide keep the

money invested and receive in installments.

59



BIBLIOGRAPHY

ON LINE RESOURSES

www.Reliancelife.co.in

www.proquest.com

60

http://www.reliancelife.co.in/

http://www.proquest.com/

http://www.reliancelife.co.in/

http://www.proquest.com/



APPENDIX

QUESTIONNAIRE

Dear sir/madam

This is survey on ULIP.The survey will help Reliance in analyzing its ULIP in comparison

to others. Please respond the questionnaire below by takingout some minutes from your

valuable time.

Q.1 Is it a life stage based plan?

(a)Yes (b)No

Q.2 How many free swiches do it provide?

………………………………..

Q.3 What are the swiching charges?

…………………………….

Q.4 Is it a ready-made /tailor-made plan ?

(a)Yes (b)No

61



Q.5 Is it a Systematic Transfer Plan?

(a)Yes (b)No

Q.6 Does it offer Exchange option?

(a)yes (b)No

Q.7 How many funds do it offer?

………………………….

Q.8 Does it provide Top ups?

(a)Yes (b)No

Q.9 Does it offers the facility of partial withdrawal?

(a)Yes (b)No

Q.10 What are the surrender charges?

……………………………….

Q.11 What is the amount of Premium(minimum)?

……………………………………..

Q.12 What are the fixed management charges(FMC)?

…………………………………….

Q.13 What are the Top- up charges?

……………………………

Q.14 What is the minimum/ maximum age of entry?

………………………………………………

62



Q.15 Name:

Q.16 Company Name:

Thanks

comparison of ulip

Documents